16-Aug-2017: Cabinet approves creation of a single non-lapsable corpus fund for Secondary and Higher education

The Union Cabinet approves creation of a single non-lapsable corpus fund in the Public Account for Secondary and Higher education known as "Madhyamik and Uchchatar Shiksha Kosh" (MUSK) from the proceeds of Cess for Secondary and Higher Education levied under Section 136 of Finance Act, 2007.

The funds arising from the MUSK would be utilized for schemes in the education sector which would be available for the benefit of students of secondary and higher education, all over the country.

In connection with the above fund, the Union Cabinet also accorded its approval to the following:

1. Administration and maintenance of the above pool by Ministry of Human Resource Development.
2. Accruals from the Cess would be utilized in the ongoing schemes of Secondary and Higher Education. However, the Ministry of Human Resources Development can allocate funds for any future programme/scheme of secondary and higher education, based on the requirement, as per prescribed procedure,
3. In any financial year, the expenditure on ongoing schemes of the Department of School Education & Literacy and Department of Higher Education would be initially incurred from the gross budgetary support (GBS) and the expenditure would be financed from the MUSK only after the GBS is exhausted.
4. The MUSK would be maintained as a Reserve Fund in the non-interest bearing section of the Public Accounts of India.

The major benefit will be enhancing access to secondary and higher education through availability of adequate resources, while ensuring that the amount does not lapse at the end of financial year.

Features:

1. Accruals into the proposed non-lapsable fund will be made available for expansion of secondary education and higher education.
2. For Secondary Education: Presently, the Ministry of Human Resources Development envisages that the accruals from the Cess would be utilized in the secondary education for ongoing Rashtriya Madhyamik Shiksha Abhiyan Scheme and other approved programmes including National Means-Cum-Merit Scholarship Scheme and National Scheme for Incentives to Girls for Secondary Education.
3. For Higher Education: the accruals would be utilized for ongoing Schemes of Interest Subsidy and contribution for guarantee funds, Scholarship for College & University Students; Rashtriya Uchchatar Shiksha Abhiyaan; Scholarship (from Block Grant to the institutions) and National Mission on Teachers and Training.

However, the Ministry of Human Resources Development can allocate funds for any programme/scheme of secondary and higher education, based on the requirement & prescribed procedure.

The purpose of levying cess for secondary and higher education is to provide adequate resources for secondary and higher education. The fund would be operationalised as per the present arrangements under Prarambhik Shiksha Kosh (PSK) wherein the proceeds of cess are used for Sarva Shiksha Abhiyan (SSA) and Mid-Day Meal (MDM) Schemes of the Department of School Education & Literacy.

Background:

1. During the 10th Plan, an education cess of 2% on all central taxes was imposed w.e.f. 1.4.2004 to make available additional    resources    for    basic    education/elementary education to augment the existing budgetary resources. A need was felt to give a similar fillip to the effort of the Central Government in universalizing access to secondary education and expanding the reach of the higher education sector.  Therefore, the Finance Minister, in his budget speech of 2007 proposed an additional cess of 1% on central taxes for secondary and higher education.
2. A cess @ 1% on central taxes, called the "Secondary and Higher Education Cess" was levied through Finance Act, 2007 to "fulfil the commitment of the Government to provide and finance secondary and higher education" (Section 136 of the Act).
3. In July, 2010, a draft cabinet note was circulated by the HRD Ministry wherein it was proposed to create a non-lapsable fund   in   the   Public Account   called   "Madhyamik and Uchchatar Shiksha Kosh" (MUSK) as a receptacle for the proceeds of the Secondary and Higher Education Cess. The views of concerned Ministries viz the then Planning Commission, Ministry   of   North   Eastern   Region, and Department of Economic Affairs, Ministry of Finance were sought in this regard.  The Department of Economic Affairs did not agree to the proposal on the grounds that the Budget allocations for the schemes of Secondary Education and Higher Education have been far more than the amount of 1% cess collected. Therefore, the amount of the cess collected is deemed to have been fully allocated for the schemes of Secondary and Higher Education in the respective financial years. Hence, funds on account of 1% cess for the past period are not available now for allocation.
4. Subsequently, the HRD Ministry sought the approval of the Department of Economic Affairs for revisiting the issue of creation of "Madhyamik and Uchchatar Shiksha Kosh" (MUSK) on 11th February, 2016. Department of Economic Affairs on 20th June, 2016 approved that this Ministry may move a draft Cabinet Note to seek the approval of the Cabinet for creation of. MUSK.

3-Jul-2018: India contributes US$100,000 for fund to ensure developing countries’ role in international cooperation on critical tax matters

India delivered a voluntary contribution of US $100,000 to promote the participation of developing countries in the work of a key UN committee on tax matters that looks at key issues that could mobilize resources for sustainable development.

India’s contribution is a response to the call of the Addis Ababa Action Agenda, which was adopted at the Third International Conference on Financing for Development in 2015, to further resource mobilization in support of sustainable development and which reiterated a request for countries to make contributions to the UN Tax Trust Fund. This is the second year India has contributed to the fund and is still the only country that has contributed so fair.

The UN Tax Trust Fund aims to support the work of the UN Tax Committee. The UN Tax Committee, a subsidiary body of the UN Economic and Social Council (ESOSOC), tackles key issues that could help developing countries to unleash their potential to achieve sustainable development through technical support on areas such as double taxation treaties, transfer pricing (profit shifting) taxation of the extractive industries and taxation of services.

In Addis Ababa, UN Member States committed to work together to enhance the UN Tax Committee’s resources to strengthen its effectiveness and operational capacity. The Addis Agenda also specifically called on the Member States to support the UN Tax Committee and its subsidiary bodies through the voluntary Trust Fund, supporting the increased participation of developing country experts at subcommittee meetings.

27-Jun-2017: India makes first voluntary contribution to UN Tax Trust Fund

The United Nations Trust Fund for International Cooperation in Tax Matters (the UN Tax Fund), set up to help developing countries actively participate in the discussion of tax issues, received its first financial voluntary contribution from the Government of India.

The UN Tax Trust Fund aims to support the work of the Committee of Experts on International Cooperation in Tax Matters (the UN Tax Committee).  Voluntary contributions for the Trust Fund have been called for by the UN and the Tax Committee since its establishment in 2006. The call for contributions was also emphasized in the Addis Ababa Action Agenda adopted at the Third International Conference on Financing for Development in 2015.

India has become the first country to respond to the call with an initial contribution of US$ 100,000. This voluntary contribution will be dedicated towards ensuring greater support for developing country participation in the subcommittee meetings of the UN Tax Committee, which are currently unfunded.

The UN Tax Committee, a subsidiary body of the UN Economic and Social Council (ESOSOC), has provided guidance on current issues such as double taxation treaties, transfer pricing (profit shifting) taxation of the extractive industries and taxation of services. The Committee also provides a framework for dialogues with a view to enhancing and promoting international tax cooperation among national tax authorities, while making recommendations on capacity-building and the provision of technical assistance to developing counties and countries with economies in transition.

Handing over a cheque to the Financing for Development Office, the Government of India expressed hope that other countries will similarly contribute to the UN Tax Trust Fund to advance developing country participation on taxation issues. Through the Trust Fund, they also expect that more developing countries will draw upon the best practice of other bodies, ensuring that global tax cooperation norms and rules will work more effectively and efficiently for all countries and all stakeholders.

About the Addis Ababa Action Agenda and the UN Tax Trust Fund

The Addis Agenda provides a global framework to ensure the effective mobilization of resources at the national and international level for sustainable development.  Implementation of the Addis Agenda  supports the implementation of the Sustainable Development Goals (SDGs) and is an integral part of the 2030 Agenda for Sustainable Development, the historic and transformational agenda that countries unanimously adopted in 2015.

In Addis Ababa, UN Member States committed to work together to enhance the UN Tax Committee’s resources to strengthen its effectiveness and operational capacity. The Addis Agenda also specifically called on the Member States to support the UN Tax Committee and its subsidiary bodies through the voluntary Trust Fund, supporting the increased participation of developing country experts at subcommittee meetings.